Individual Retirement Accounts: A Review of the Evidence / Jonathan Skinner.

Format:

Book

Author/Creator:

Skinner, Jonathan.

Contributor:

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w3938.

NBER working paper series no. w3938

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Individual Retirement Accounts

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1991.

Summary:

Recent legislative proposals have included restoring Individual Retirement Accounts (IRAs) to their pre-1987 eligibility rules. Whether IRAs are simply tax windfalls with no effect on saving, or whether IRAs stimulate saving, is a crucial issue in evaluating the effectiveness of such proposals. In this paper, I review the previous literature on IRAs as well as presenting new evidence on the saving behavior of IRA contributors. In brief, IRA contributors are wealthier and older than the general population. There is no clear consensus from structural economic models on whether IRA contributions are new saving or old, shuffled, saving. Nevertheless, IRA contributors during the 1980s were remarkably active savers. For example, the typical IRA contributor was estimated to hav~ increased total financial wealth in real terms by 71 percent between 1982-86. Individual Retirement Accounts may have induced saving through psychological factors not normally present in orthodox economic models, but evidence on such factors is speculative rather than conclusive.

Notes:

Print version record

December 1991.